U.S. BANK, N.A. v. ANGEL MONTESDEOCA

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6042-09T3

U.S. BANK, N.A., as Trustee for

the registered holders of MASTR

Asset Backed Securities Trust,

2006-AM1, Mortgage Pass-Through

Certificates, Series 2006-AM1,

Plaintiff-Respondent,

v.

ANGEL MONTESDEOCA,

Defendant-Appellant,

and

SINDIA N. LOOR, AAMES

FUNDING CORPORATION d/b/a

AAMES HOME LOAN,

Defendants.

____________________________________

September 1, 2011

Submitted July 12, 2011 - Decided

Before Judges Sapp-Peterson and Ashrafi.

On appeal from Superior Court of New Jersey,

Chancery Division, Hudson County, Docket No. F-18452-06.

Joseph A. Chang & Associates, LLC, attorneys for appellant (Mr. Chang, on the brief).

Zucker, Goldberg & Ackerman, LLC, attorneys for respondent (Steven D. Krol, of counsel and on the brief).

PER CURIAM

Defendant Angel Montesdeoca appeals from a July 28, 2010 order of the Chancery Division denying his motion to vacate a sheriff's sale. We affirm.

Defendant was the owner of a three-family home in Union City. He and his family lived in one of the units. He rented the other units to tenants. Defendant had given a mortgage on the home that was assigned to plaintiff bank. He defaulted on the mortgage note, and plaintiff filed a complaint in foreclosure in October 2006. Defendant did not respond to the complaint, and default was subsequently entered. Plaintiff obtained a final judgment of foreclosure on October 22, 2009. The Hudson County Sheriff posted notice of the sheriff's sale at the property on January 6, 2010. The sheriff's sale was eventually scheduled for May 6, 2010, and plaintiff's attorney sent notice of the date of sale to defendant at the address of the subject premises on April 19, 2010. Defendant took no action before the court at that time.

The property was sold to plaintiff at the sheriff's sale on May 6, 2010. Defendant's first appearance before the court was a motion to vacate the sale filed on June 2, 2010. The court heard argument on defendant's motion on July 12, 2010, and extended the post-sale redemption period until July 26, 2010. On July 26, the court heard further argument and ruled from the bench that the motion would be denied. It entered an order to that effect on July 28, 2010, and defendant filed this appeal.

Subsequently, we granted temporary emergent stays of the eviction of defendant and his family and gave him an opportunity to post a supersedeas bond to protect the costs to plaintiff of his continued occupancy. Defendant did not file a bond, and the stay automatically dissolved on January 5, 2011. Defendant and his family were evicted in February 2011. The sheriff's deed was delivered to plaintiff on March 28, 2011, and recorded on March 31, 2011.

Plaintiff acknowledges that a court of equity has the power to set aside a sheriff's sale "by reasons of fraud, accident, surprise, or mistake, irregularities in the conduct of the sale." First Trust Nat'l Assoc. v. Merola, 319 N.J. Super. 44, 49 (App. Div. 1999); see Crane v. Bielski, 15 N.J. 342, 346 (1954); Karel v. Davis, 122 N.J. Eq. 526, 529-30 (E. & A. 1937). Plaintiff argues, however, that defendant provided no ground for vacating the sale. We agree.

Defendant contends he did not receive notice of the date of sheriff's sale and that plaintiff failed to respond to his application for a loan modification agreement before proceeding with the sale. The Chancery Division appropriately rejected these arguments.

As to notice of the sale, plaintiff lived at the premises, and a notice of sheriff's sale was posted on the property in January 2010. Plaintiff took no action at that time. When the sheriff's sale was scheduled for May 6, 2010, counsel for plaintiff sent notice to defendant by both certified and regular mail at his home address. Defendant did not claim the certified mailing, but the regular mailing was not returned to plaintiff by the post office. Plaintiff adequately demonstrated that it served notice of the date of the sheriff's sale upon defendant as required by Rule 4:65-2.

Defendant also argues that he submitted an application for loan modification and never heard a response from plaintiff. He claims federal law requires notice of the declination and that it is inequitable to permit the mortgagee to proceed with a sheriff's sale without giving notice to a residential owner that his application for a loan modification agreement has been denied. Plaintiff responds that defendant was notified of the denial in January 2010, but even if defendant's contention is accepted that he did not receive that notification, the equities in this case clearly do not favor defendant.

The federal Home Affordable Modification Program (HAMP), created pursuant to 12 U.S.C. 5219, seeks to minimize the loss of homes in foreclosure and to assist homeowners in default. United States Department of Treasury directives, which were issued on March 24, 2010, and a handbook issued in December 2010, direct that notice of declination of a HAMP application be provided to the homeowner. In this case, defendant's application was denied in January 2010, before the directives and handbook were issued. Also, the federal legislation does not contain any provision for vacating a sheriff's sale if notice was not sent in accordance with the directives. Finally, plaintiff claims that notice of declination was sent to defendant, but like notice of the sale, defendant contends he did not receive it at his home address. Defendant's contention is not credible.

Furthermore, the equities in this case do not favor defendant's request to vacate the sheriff's sale. Not only did defendant fail to take any action from the time of the complaint in foreclosure in October 2006 to the sheriff's sale in May 2010, for the entire four-year period since his mortgage loan went into default, defendant and his family lived at the premises without making any payments toward the loan. At the same time, defendant collected rent from tenants and kept the proceeds for himself. The Chancery Division did not abuse its discretionary authority in declining to vacate the sheriff's sale on equitable grounds. See First Trust, supra, 319 N.J. Super. at 49 (exercise of the court's power to set aside a sheriff's sale "is discretionary and must be based on considerations of equity and justice").

A